We’re enhancing our care home lending criteria

We’ve made an exciting enhancement to our care home lending criteria that will allow us to lend to first time and inexperienced operators.

What are we changing?

Previously, we have not lent to applicants with less than two years’ trading experience within the care sector. We’ve now enhanced our criteria so that we will consider lending to applicants with less or no experience in the sector, subject to these additional criteria:

• Stressed debt service cover (DSC) must be 145% minimum
• Maximum of 70% LTV (fee can be added on top)
• Must be a Good/Outstanding CQC-rated home
• A strong, experienced existing management team must remain in position post-purchase (Care Home Manager must have been in role at the home for at least two years and hold a minimum of NVQ Level 4. Deputy Manager must hold a minimum of NVQ Level 3)
• Average occupancy must have been 90% or more over last six months
• Personal Guarantee must be minimum of 10%
• Care home must be located within three hours travel time or less of the applicant’s home address (if they do not plan to relocate)

Why are we doing this?

The UK has an ageing population. Demand for social care is set to rise dramatically, which will require a significant improvement in elderly residential capacity.

However, the capacity of both nursing care homes and residential care homes for older people has fallen. This has been driven by a number of factors, including difficulties in financing and recruiting and retaining staff, and compounded by the ongoing fallout from the UK’s withdrawal from the European Union and the COVID-19 pandemic.

The SME care home market has been drastically underserved by lenders. Here at Atom bank, we have always tried to provide support for the sector. We believe there continues to be a gap in the market for a lender to deliver where others have not.

We hope that our updated criteria will provide more support for those new to the sector, specifically first time and less experienced operators. It will help to address some of the wider capacity issues by making it easier for new operators to establish themselves.

Got any questions?

Get in touch with our TBDM team by email at businesssupport@digitalmortgages.net or by phone on 0333 399 0060 (9am–5pm, Mon–Fri). Alternatively, brokers can contact their RBDM.